Where the big arguments for devolution are heading

This post most of which I mainly wrote for an academic blog gives anyone interested a heads up on a more sophisticated theatre of devolution – Scotland – assuming it votes No in the referendum. A couple of points to start with.

First, taxation is the big theme. How much of its own revenue should a devolved Parliament raise? The Westminster parties are taking their Scottish affiliates at their word and all are promising greater taxation powers, with a corresponding reduction in the block grant from Westminster.

The second is that federalism is an emerging theme. The Lib Dems are committed to raising two thirds of all revenues spent in Scotland. This is a level at which the initiative in most matters of government would rest in Edinburgh. Federalism means Westminster could not even in theory abolish Holyrood. Scots would arrogate powers to Westminster instead of the other way round. It would mean the end of the idea of the “sovereign” Westminster Parliament. More practically it would probably mean fewer MPs from Scotland. This would ease the problem of Scottish MPs voting for laws that apply only to England, the “West Lothian question.” There is a loud lobby but very little demand in favour of separate English Parliament. Westminster which is in effect the English Parliament already, would live with a smaller Scottish anomaly.

Thirdly, note the most obvious contrast with Northern Ireland. We are indeed part of the constitutional Union but barely part of the political Union which depends above all on UK party representation to make it matter. We are another cog of Union inside the big wheel of the Union of Great Britain. Our MPs can matter more in times of minority government or coalition building as of now. But Unionists are unlikely to get keen on raising more revenue locally not only because of the trade-off of a cut in Barnett transfers but because of the implications for the number of MPs’ seats. I reckon federalism is at best a long way off and probably never a runner because of the very problem it seeks to address, the asymmetric Union. Exploring how a federal Britain might work for NI raises GFA implications. Dublin would have to be consulted.

On September 18 voters in Scotland will take a momentous decision based on two sets of uncertainty: on independence which is on the ballot paper and on more devolution which is not. A recent survey by the British Election Study suggests 74% of voters want some or a lot more devolution. Only 35% of them are Yes supporters. 57% of No voters actually want more devolution and 50% of all voters believe it will happen if No wins. This is a rising tide the pro-Union parties are desperate to harness.

And so to counter the clearer appeal of independence, the leaders of Scotland’s pro-union parties gathered on Calton Hill in Edinburgh on 16 June to deliver a joint promise of more devolution in the event of a No vote. David Cameron declared:” All the mainstream pro-UK parties believe in further devolution, so whilst we would want to build consensus for a set of measures and legislation, there is no reason why these changes shouldn’t happen early in the next Parliament.” Lib Dem peer Lord Jeremy Purvis, leader of the cross-party Devo Plus group, enthused that all of the major parties were now “clearly and unequivocally supporting a stronger Scotland.”

In early July Purvis joined representatives of the other two parties, Anas Sarwar MP, Deputy Leader of Scottish Labour and member of the party’s Devolution Commission and Peter Duncan, a communications consultant and former Scottish Conservative MP, for an Institute for Government debate: “Scotland in a changing UK: Unionist visions for further devolution after the referendum.” ( Look out for the video and a follow up event on 16 July). Is the impression of chiming pro-union agreement justified?

Up to a point Lord Copper. The hard ball part of the more devolution is all about taxation. The Scotland Act 2012 already requires the Scottish government to set an annual rate of income tax from 2016. Holyrood would have control of 10p in every pound. More devolution inevitably focuses on greater powers of taxation which go beyond the Act.

Labour is bidding to raise 40 per cent of its budget from its own resources and hand control of three-quarters of basic income tax to Edinburgh. Scottish income tax would be set fifteen points lower at each band, so at 5%, 25% and 30% and include a discretionary 50% band. The block grant would be reduced by the equivalent cash value. It would then be up to the Scottish Parliament to decide what the final rate payable at each band by Scots taxpayers would be. In the other major theme of devo plus, the housing benefit part of welfare would be devolved and health and social welfare would be integrated. In a tilt at SNP over- centralisation, the UK wide Work Programme, regional economic development and skills training responsibilities would be devolved to local government. The Scottish Parliament would be constitutionally entrenched so that it could not be dissolved by the UK Parliament and would therefore become a permanent feature of the UK constitution. New statutory partnership agreements would, in Anas Sarwar’s words, “create a new partnership between Holyrood and Westminster, the best of both worlds.”

The Conservatives have finally decided to stop digging their way to oblivion by doing a spectacular U turn in the form of the Strathclyde report and going for the complete devolution of income tax. Their speaker Peter Duncan lamented that this offer hadn’t been made at least a year ago and wanted corporation tax thrown in – but this I suspect would over Whitehall’s dead body because of fears of tax competition between regions. Devolving control of income tax and air passenger duty would make the Scottish government responsible for taxes equivalent to about 40 per cent of its budget. If the Strathclyde proposals were implemented in full, devolved taxes and the Scottish share of VAT would amount to about half the budget. The Tory proposals on income tax match those of the Liberal Democrats and go further than Labour’s.

For the Lib DemsPurvis, who was the most relentlessly innovative of the trio, spoke in favour of an eventually federated Britain and a Scotland that eventually raises two thirds of its revenue. An initial report in October 2012 by a committee chaired by Menzies Campbell called Federalism: the best future for Scotland proposed full devolution of income tax (including the ability to vary rates at different tax bands) and a number of other tax bases to the Scottish Parliament, along with the assignment of a Scottish share of corporation tax revenues to the Parliament (that is, maintaining a common UK corporation tax rate but splitting the tax take between the rest of the UK and Scotland). Under “Campbell 2” in March, a multi-party conference would be held within 30 days of the referendum vote to chart an agreed path towards more devolution for inclusion in party manifestos for next year’s Westminster general election.

All three UK parties are looking towards a new Scotland Act early in the new Westminster Parliament – meaning, before the SNP government bids for a third term in the Holyrood general election of 5 May 2016. Can the pro-union parties unite sufficiently to prevent an irrepressible SNP however bruised by defeat in the referendum, rapidly recovering the initiative with “devo max” aka “independence lite” under which Scotland would gain “full fiscal autonomy”?

Behind the rather inane slogans of devo plus/ more/ max lies a whole witches brew of complexity that on the whole the IfG panel understandably ducked this side of the referendum vote. For the post- referendum UK “nothing will be the same whatever happens” is the new mantra. “The devil is in the detail” is the answering cliché. To this the IfG director and debate chairman Peter Riddell added another thought, that after the adrenaline of the Vote has subsided, other priorities might take over at Westminster and the response to a No vote might not be as prompt or as comprehensive as Scots might like.

One can imagine other complexities if a new Westminster coalition was being secretly negotiated or at least contemplated in some detail. What priority would be given to Scotland – beyond a further reduction in Westminster seats perhaps in exchange for more taxation powers? After the upheaval of the referendum campaign , would stalling on a new formula for devolution raise the cry of English treachery once again? Or would it mean cutting a bidding war down to size in favour of devo a wee bit more, forget federalism and as for the West Lothian question, as a colleague muttered to me, “live with it?”

The problem of devo more is that it fails to make the pulse race. It cannot do for No what the elemental nature of independence does for Yes. That’s its problem.